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The author is an analyst of KB Securities. She can be reached at leesunhwa@kbfg.com. — Ed.  

Raise target price from KRW170,000 to KRW230,000; maintain BUY     

We raise our TP by 35.3% from KRW170,000 to KRW230,000 and maintain BUY on HYBE. We revise up 2023E/2024E OP by 12.2%/13.7% to reflect the company’s diversifying profit sources via multi-label operations. We also lower 2023E MRP (7.16%→5.41%), pushing COE down from 10.73% to 9.53%. 

4Q22 review: OP of KRW51.7bn (-30.0% YoY) in line with market consensus   

HYBE reported 4Q22 consolidated revenue of KRW535.3bn (+16.9% YoY, +20.2% QoQ) and OP of KRW51.7bn (-30.0% YoY, -14.8% QoQ; 9.7% OPM), which was in line with the market consensus of KRW52.8bn. EBT turned to red, however, weighed down by Ithaca Holdings’ goodwill impairment losses and convertible bond valuation losses. 

Record-high sales in 4Q22            

Album sales reached 4.49mn copies (-6.0% YoY; 23.7% market share) on the back of album releases by BTS Jin (solo single), Le Sserafim (2nd mini), Seventeen (Japanese-language extended play) and BTS RM (solo). Performance revenue expanded thanks to world tours by Seventeen, TXT and Enhypen alongside growth in tour-related merch/goods sales. Content revenue was also robust, with continually solid sales for BTS photobooks and mobile game BTS Island: In the SEOM. Ad/appearance fees grew significantly with more media appearances by artists, incl. NewJeans and BTS Jungkook (FIFA World Cup opening ceremony). Yet incentive payments and costs associated with the debut of three new artists narrowed OPM to only 9.7%. 

Weverse MAU at 8.50mn (+21% QoQ)

Weverse MAU has risen steadily since its merger with V Live in July 2022, hitting 8.5mn. Artists channels and postings are also increasing. To reinforce customer retention, the company plans to launch byFans. Through the service, fans will be able to design and buy their own merch in 2Q23 and subscribe to a membership service in 3Q23. 

Global fan base expanding via multi-label strategy 

The recent QC Media Holdings acquisition is in line with HYBE’s muti-label strategy to maintain continuous artist activity regardless of genre/region via a steady flow of new artists.   




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